Product harm crisis attracts widespread negative publicity among customers regarding a brand's failure to comply with quality standards, which places consumers' lives at risk. Since company growth is the primary concern for brands such as Toyota, a product-harm crisis can have devastating consequences to the company's profit and leading status in the automobile industry. For instance, Toyota reports the highest recalls on its automobiles since 2019, a trend that has been attributed mainly to the faulty electronic systems and reduced testing of the produced vehicles due to increased demand for Toyota products (Malec & Smuts, 2021). With advances in digital technology, competitors like Tesla, who are exploiting the internet, social media, and computerized methods to establish a loyal customer base in the U.S, Europe, and Asia, would dethrone Toyota, as Apple did to Sony.
Problems Facing Toyota
Since its founding in 1933, the company has faced several problems, with some leading to the resignation of Toyota's executive management. The most significant problem facing the company is the recall of vehicles due to increased reports of accidents from Toyota customers. By 2010, the National Highway Traffic Safety and Administration linked Toyota to 89 deaths and 57 injuries (Rajasekera, 2013). The increased reports on the declined quality of Toyota products sparked social media discussions and gave competitors a glimpse into the weaknesses of the automobile company. The second problem facing the company is the rapid increase in digital technology. Since most of the accident and quality concerns reported by customers are based on faulty electronic systems, digital technology becomes a severe concern for Toyota. That is because automobile competitors such as Tesla are using digital chips and software to upgrade traditional electronic systems, with significant improvements to car safety (Malec & Smuts, 2021). Besides, computerized methods play a crucial role in controlling and optimizing vehicle function and performance. Finally, the problem of late provision of explanations to customers in the event of a crisis threatens consumer trust and raises public doubts about Toyota's sincerity. For instance, in February 2010, it was reported that delays in responding to their customer complaints compelled the government to summon the company's president for testimony in the U.S Congress.
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Organizational Changes
Faced by increased customer reports on the accidents and quality of Toyota products, the company embarked on drastic organizational changes to recover its reputation in the automobile industry. Some of the changes were successful in accomplishing the company's objectives. However, other changes proved unsuccessful.
Successful Organizational Changes
The most significant organizational change that Toyota reportedly implemented was voluntary recalls (Rajasekera, 2013). The change allowed Toyota customers to return products based on the first recall law in the United States that went into effect in 1966. Most importantly, the strategy proved successful in enhancing and improving customer confidence and trust in Toyota. Secondly, Toyota realized the power of social networking sites (SNSs) such as Facebook and Twitter in its quest for growth. SNSs exposed the company to millions of its clients worldwide, offering Toyota the opportunity to monitor customer complaints and communicate their actions quickly. Not only did it increase their customer range, but it also gave the company a platform to understand clients' needs and integrate them into their future vehicle model.
Unsuccessful Organizational Changes
The most un successful change ever attempted by Toyota was achieving 100% testing of the produced vehicle s. While testifying in Congress in 2010 regarding the increased consumer complaint and recalls in Toyota cars, president Akio Toyoda noted that increased demand for Toyota products had led to a decline in testing the vehicles. He reported that only 60% of the produced cars were tested, signifying a massive failure of Toyota's quality management department ( Rajasekera, 2013 ) . The reports significantly harmed the top-quality reputation of Toyota, a status the company had worked to develop for decades.
Recommendations
To combat vehicle recalls, drastic measures must be taken by Toyota. Most importantly, automation of quality processes should be enhanced to reduce reliance on human testing. In so doing, the company will achieve 100% testing of its vehicles after production. Besides, the company should increase its social media strategy team to monitor customer complaints and needs across Toyota's social networking sites. Also, the application of computer technologies in the creation of vehicle control systems should be a top priority (Berman, 2021). Therefore, problems can be monitored in real-time and solutions can be downloaded from the internet quickly and easily, and fixes can be accomplished cheaply and swiftly. Finally, to address vehicle hardware issues, Toyota must increase its dealership worldwide.
Conclusion
Since company growth is the primary concern for Toyota, they must tackle competition and quality through technology and social networking sites. Failure to embrace changes may lead to significant losses in profits and company reputation.
References
Berman, B. (2021). Managing the Product Recall Process. Rutgers Business Review, 6(1), 95-111.
Malec, A. M., Smith, P. K., & Smuts, A. E. (2021). Recall and Vehicle Characteristics Associated with Vehicle Repair Rates. Review of Industrial Organization, 1-19.
Rajasekera, J. (2013). Challenges to Toyota caused by recall problems, social networks, and digitization. Asian Academy of Management Journal, 18(1 ), 1.
